If you're like most people, as the holiday season progresses you become increasingly anxious about whether you're sufficiently prepared. That's especially true for online retailers that depend heavily on selling lots of merchandise during the holidays to give a year-end boost to their company's annual revenues. In recent years, the approach of the holiday season produced a combination of anticipation and anxiety for online retailers. On the one hand, big sales during the holidays were a way to reinforce their investors' faith and demonstrate the growth potential of their fledgling businesses. On the other hand, unpredictable bursts in sales volume also called attention to embarrassing operational lapses, such as the failure to ship orders on time or respond to customer inquiries.
But this year, they're afraid of something worse. Most dot-coms wonder whether they'll survive long enough to see another holiday sales season. The online divisions of traditional retailers worried that this might be the first bad year for holiday sales--a bad holiday season to cap a bad year.
Who can blame them for their increased anxiety? It has been a Scrooge of a year for online retailers. First the Internet bubble burst. Then the overall economy plunged into recession. Finally, Sept. 11 threw cold water on some early indicators of a recovery.
But it's unlikely to be as bad as many online retailers may have expected. Jupiter Media Metrix estimates online holiday sales will grow a modest 11 percent this year over last year. In comparison, online holiday sales in 2000 were up 54 percent from 1999 levels, and 1999 holiday e-sales increased 126 percent from 1998 levels. Most research firms are forecasting between $9.5 billion and $11.9 billion in online sales this holiday season.
Even though growth may be slowing, it's growth nonetheless. Venture capitalists might be disappointed by an 11 percent growth rate but traditional retailers would be thrilled with it. The way things are shaping up, this may be e-commerce's first "normal" holiday season. For the first time, retailers are unlikely to suffer the pitfalls of manic growth, including poor customer service, inventory shortages, and shipping failures. Online retailers can breath a sigh of relief. Or can they?
Not likely. In the past, seasonal problems could be regarded as growing pains--the embarrassing, but understandable symptoms of a new retail channel undergoing double- or triple-digit growth in uncharted waters. That excuse won't wash anymore, as customers are much less likely to forgive Web sites that don't deliver as promised or provide the convenience they expect.
Slowing growth forecasts also mean that there isn't a bigger and bigger pool of customers. For that reason, online retailers' primary objective this season should be to create as many satisfied customers as possible. Treat them well and they might come back. Treat them poorly, and they're certain to go elsewhere. This year, execution is everything.
With the shopping season already in full swing, it's probably too late to make radical changes to your site for this year. Still, there are some relatively minor steps you can take even now to survive this year's holiday e-tailing season--and perhaps create customer good will for next season and beyond:
Stick to the fundamentals. Online shoppers aren't looking for entertaining graphics and sound effects. They want to save time and avoid the hassle and crowds at the mall. Keep the shopping experience simple and predictable. Don't worry about special features, such as holiday gift registries. A July survey from Jupiter showed that only 7 percent of online buyers created an online gift registry for themselves or a spouse for the winter holidays.
Under-promise and over-deliver. Update your site quickly so shoppers know when items are out of stock while they are browsing rather than after they have placed an order. If you don't think you can restock or ship a purchase in time, don't create even a glimmer of false expectation. This year, err on the side of being conservative. In certain cases, you might even consider referring customers to another online retailer if you're out of stock or can't otherwise satisfy their needs.
Emphasize service. No matter how well you perform, some customers will still come away disappointed, so make sure you have a strategy in place for dealing with them. Most customers will give retailers another chance if they respond well to their complaints. The best solution is decidedly low-tech: an easy-to-find toll-free phone number. Make sure phone operators are armed with information on providing refunds and credits, and are trained in other ways of making customers feel like you want to make good and leave them satisfied.
If nothing else, this holiday season points to the future for online retailers. As e-commerce matures it's becoming more like traditional retail. Growth is likely to be gradual, so it's wise to manage for the long haul. That means careful planning, sound fundamentals, and good service. Sound like a New Year's resolution?
How have you prepared your Web site for holiday sales? How will online retail shape up in the new year? E-mail Adrian or Talk Back below.
